Mantega Says Rate Cuts to Stimulate Entire Brazilian Economy

By Giulia Camillo -
Dec 3, 2012

Brazilian Finance Minister Guido Mantega said interest rate cuts by the central bank will in time
serve to stimulate all of Brazil’s economy.

Mantega, speaking at an event in Sao Paulo last night,
reiterated that a weaker Brazilian real will help stimulate
competition. The currency declined 4.9 percent in November, the
worst performance against the dollar among the 16-most traded
currencies tracked by Bloomberg.

The finance minister said Nov. 30 that the government will
continue to pursue stimulus measures, adding that manufacturers
that benefit from a weaker real had yet to see the full effects
of the currency’s plunge.

A report last week showed that growth in the world’s sixth-
biggest economy expanded 0.9 percent in the third quarter from a
year earlier, the worst performance among the so-called BRIC
nations. On the quarter, gross domestic product grew 0.6
percent, half the pace forecast by economists surveyed by
Bloomberg.

After the Nov. 30 report showed GDP missing forecasts, the
real fell to a three-year low. In trading yesterday, the
currency rebounded 0.6 percent to 2.1235 per dollar.

While GDP was not what the government was hoping for, the
economy is accelerating and will expand by 1 percent in the
fourth quarter, Mantega said Nov. 30. The government is
maintaining its forecast for 4 percent growth next year, he said
at a news conference in Sao Paulo.

Since last August, the central bank has lowered the Selic
rate by 5.25 percentage points to a record low 7.25 percent.

Mantega last night said Brazilian economic growth is the
means to transforming society and that Brazil is becoming a
great middle class country.